During the announcement of the new iPhone 3G at Apple’s Worldwide Developers Conference yesterday Steve Jobs touted affordability as one of the main improvements over the previous iPhone, citing that 56% of people considering purchasing the original iPhone said it was too expensive. 

When Jobs announced the new version of the iPhone would sell for $199 USD he asserted "At just $199 we think the iPhone 3G is going to be affordable for just about everyone"

Not quite.

As more details have emerged about the terms of that price and the available iPhone service plans, it’s clear Jobs claim was somewhat deceptive.  While the price of the new iPhone 3G is $200 cheaper up front than a previous 8GB iPhone, that doesn’t figure in the cost of a service plan required to use it.  Unlike the previous iPhone, the $199 price is entirely dependent on signing a 2yr service agreement with AT&T.  In other words, like most new phones, the price is subsidized.

Because of the move to the faster 3G network the monthly data plan required to use an iPhone actually increased $10 over the older EDGE data plan.  The monthly plans for an iPhone 3G now start at $69.99/month ($30-data, $39.99-voice).  Additionally the 200 text messages a month that use to be part of the EDGE data plan are now gone.  Add those back in, and you’ll need to tack on another $5 to your monthly bill or $20 for unlimited texting.

Total cost of ownership for the old 8GB iPhone:  $399 (phone) + $1439 (2yr plan @ 59.99/month) = $1838.76

Total cost of ownership for the new 8GB iPhone 3G:  $199 (phone)  + $1679.76 (2yr plan @ 69.99/month) = $ 1878.76

More affordable? Actually it will cost you an extra $40 over the life of the two year required contract, or $160 more if you plan on doing any text messaging.

I’m not necessarily saying $40 more over a two year period isn’t worth it for the added features and faster service you get with the iPhone 3G, though it is an incredible amount of money to spend on wireless service when you look at the total cost.  But their marketing ploy calling the iPhone “half the price” and Jobs directly stating its more affordable now for the 56% of consumers who said it wasn't before is false and misleading.  Anyone who couldn’t afford the previous iPhone will be even worse off buying an iPhone 3G.

I’m only describing the current USA/AT&T situation.  Customers in the UK and elsewhere in the world may actually come out ahead with the new phone pricing.  In the UK for instance, the old 8GB iPhone cost 269 pounds, while the iPhone 3G will now be just 99. 

Have you worked out the math for your home country? If so leave a comment!